Forrester: Microsoft’s Windows 8 Gambit Won’t Move the Needle Much

Smartphones and tablets have knocked Microsoft’s share of computing device operating-system sales from about 70% four years ago to about 30% today, thanks to the emergence of operating systems like Google’s Android and Apple’s iOS, according to a new report by Forrester Research.

To push back against that trend, Microsoft is releasing Windows 8 later this week, an updated operating system that adds a tablet sheen to its traditional operating system. It’s a bold move, but in reality, the era of Microsoft’s dominance has passed and the market is destined to be split among multiple players, according to a new report by Forrester.

“The future is one where no single OS or vendor is dominant — Microsoft is extremely late to the market expansion into mobile and has lost its dominant position,” said Forrester Research VP and Principal Analyst Frank Gillett. ”Now it’s one of three contenders. So Windows survives, and is not in the downward spiral of RIM, Palm, and Nokia, but it is no longer the king of the expanded personal device hill, which now includes PCs, tablets, and smartphones.”

Forrester Research

After spending years dominating the operating system market, Microsoft is destined to become one of three major players.

So while Microsoft will capture (or, perhaps the more accurate word is retain) significant market share with its move to Windows 8, its days of being the dominant operating system of the computing world have come to a close.

That’s mostly due to the overwhelming emergence of mobile devices running Android and iOS. Apple’s iOS software will continue to dominate the tablet market, while Android will lead the smartphone market. Microsoft will control the PC market thanks to an enormous amount of goodwill built in from years of dominance.

“(Salesforce.com CEO Marc) Benioff, like others, is overlooking the installed base of over 1 billion PCs in the world, and the goodwill and brand awareness of all those users,” Gillett said. “That’s worth a lot for keeping people on PCs, but it won’t help much for getting into mobile until at least 2014. ”

Here’s how it all hammers out in the end, according to the report:

Forrester Research

Android, iOS and Microsoft’s Windows are all going to dominate very different parts of the market.

“We think Google has missed the bus on tablets, even though it now dominates smartphone unit sales,” Gillett said. “The tablet apps just aren’t there and sales show that. The Nexus 7 is helping a bit, but there’s no evidence of a big turnaround. So Windows will see some success in tablets, 27% by 2016, because of the PC installed base, enterprise IT affinity, and the weakness of Android tablets.”

Forrester Research

While Macs have gained a small share, Windows will continue to dominate the operating system market for PCs.

So the lesson here is that enterprises are going to have to deal with three different types of operating systems, instead of just the one from Microsoft that they have always employed. Most of this is due to a “bring-your-own-device” trend, where employees are now encouraged to pick their own phone and run corporate services on that device — whether it’s an iPhone or a BlackBerry or anything else.

Microsoft, for its part, will have to split the current form of Windows 8 — which includes a “desktop mode” — into a separate version that will be strictly a desktop version of Windows if it wants to prevent Windows users from simply installing Windows 7. For the time being, Microsoft has to find a way to offer the Windows 8 desktop without the tablet-like interface of Windows 8. Over time, it can move to the more radical Windows 8 user interface.

Still, the concept of dominance based on “operating system share” is slowly fading, according to the report.

Companies like Amazon are building services where the actual software doesn’t matter as much as the money Amazon makes off selling services like streaming movies. Moving forward, revenue and profit per user will be more important, and Microsoft has a massive number of user accounts to capitalize on that trend, according to Forrester Research.

We’ve reached out to Microsoft for comment and will update if they do.